Citigroup commodity analysts on Thursday boosted their outlook for first-quarter Brent crude prices $71/bbl from $65/bbl earlier.
While the analysts maintained a bearish price outlook for the year, they said frigid weather and "potentially larger geopolitical impacts" on Iranian exports was behind the upward Q1 revision.
The investment bank also cited "impressive momentum" in the market so far in the new year, saying curve structures for Brent and West Texas Intermediate crude have strengthened with front months trading at widening premiums to forward numbers.
The bank's report credited much of the move to a "shift in investor sentiment," adding that net long positioning across the two crude benchmarks has stretched to a nearly six-month high of about 400,000 contracts, or 400 million bbl.
Other factors that would affect crude prices early this year include a further reduction in Russian exports (a preliminary tally put the number below 4.5 million b/d) and a decline in West African crude exports. Cold weather inspired freeze-offs have also curtailed some output in the U.S., Citi said.
While the bank's analysts raised the possibility of tougher U.S. sanctions against Iran once President-elect Donald Trump takes office, they believe his administration will mostly avoid moves that could raise energy prices.
An early year wildcard has come from China, which has refrained from buying some Iranian oil in favor of other suppliers. The action is tied to bans on allowing U.S. sanctioned vessels to enter the country. But the bank said Chinese GDP growth may be weak at just 4.2%. Each 1% change in GDP growth equates to roughly 100,000 to 150,000 b/d of additional oil demand, the report said.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
--Reporting by Tom Kloza, tkloza@opisnet.com; Editing by Jeff Barber, jbarber@opisnset.com
(END) Dow Jones Newswires
01-09-25 1324ET
